Patent Nonsense
D.A. Ridgely on Aug 5th 2008
One of the things that distinguishes intellectual property from the more intuitively obvious tangible variety is that the very notion of intellectual property requires a justification in the sense that tangible property almost never does. Utopians of one variety or another have tried, almost always with disastrous consequences, to abolish the institution of private property, but as far as I know there has never been a society that has denied the existence or necessity of property rights of any sort at all. Typically, their alternative has been to assert some sort of collectivist or communitarian ownership; but while it may be that the clan or the tribe “own everything in common” or the “people (collectively) own the means of production,” woe be any rival clan or tribe or people who happen by and start asserting similar property rights in the same stuff. Wars have been known to start that way even in utopia.
The obvious thing about tangible property is that, being stuff, it’s there whether we call it property or not. That is, whether ♫ This land is my land (or) this land is your land ♫, this land is here whether we say so or not, let alone whether ♫ This land was made for you and me. ♫ And so are its flora and fauna and minerals and water running through it or beneath its surface, etc.
How human society has gone from the realization that the world is filled with stuff to the notion that some of it is our stuff (or your stuff or, most importantly, my stuff) is an interesting topic, but not one with which I wish to concern myself here in any detail. If you care, I’ll merely note in passing that I reject all “natural right” theories of property, personally, especially including the so-called Lockean “labor + stuff = property” theory.
Still, I constantly run across fellow self-described libertarians who believe in one sort of natural rights theory or another and a fairly large number of them believe that their theory justifies the notion of tangible personal property (whether, forgive the legalism here, real or chattel) but not intellectual property. Intellectual property – by which I mean here the usual unholy trinity of patents, copyrights and trademarks – is on this account the equivalent of a state enforced and, worse yet, state created monopoly. To which I respond:
Yes, that’s true. Exactly like the state-created and state-enforced monopoly any owner of any sort of property whatsoever enjoys versus any non-owner. To be sure, the land would still be there with or without a state enforced legal system, but it wouldn’t be anyone’s property. Not in anything like the sense we mean by property now, that is. All of our philosophical twaddle about what should or shouldn’t or can or can’t be deemed property aside, the ownership of a patent or trademark is no different from the ownership of an automobile or a condominium. They are all creatures of the state or, more specifically, of a state enforced legal system one of the principle justifications for is the sorting out of competing claims over the same resources.
Ah, say my opposition, but land and the stuff we find and trap or kill or take and make new stuff out of on the land (and sea) are quintessential examples of real resources; namely, natural resources. Patents and trademarks and copyrights are mere fictions.
I agree. But they are highly useful fictions, and if my libertarian confrères would get off their pseudo-Kantian high horses about absolute right and wrong and concentrate instead on the far more useful questions of pragmatic good or bad, I think they’d be more inclined to agree with my perspective. Which is as follows:
(1) The state of the law of intellectual property is in need of serious reform, but (2) we would all be better served by, for example, a reformed law of patents than by the entire abolition of patents. For you theorists, I will add (3) there are no serious theoretical reasons, ethical or otherwise, precluding us from, as it were, saving the baby even as we throw out the dirty bathwater here.
By way of giving an example of the sort of unnecessary and counterproductive infanticide I have in mind here, let me quote extensively from a recent Kevin Carson piece over at Art of The Possible. Carson makes his point by quoting a commenter there, and because I am too lazy to edit extensively I will do the same, as follows:
2) Eliminate drug patents. Patents are often justified by the allegedly high cost of developing drugs. But as frequent AoTP commenter quasibill observed, the main source of the expense is not developing the version of the drug that is actually marketed, but gaming the patent system. He challenged the popular misimpression, encouraged by smarmy drug company ads,
that what big pharma is researching is cancer meds. It’s not. In the rare instances that big pharma produces and markets such medicines, it has purchased them from small start-ups that themselves are the result normally of a university laboratory’s work. When big pharma cites to billions of research costs, what it is talking about is the process whereby they literally test millions of very closely related compounds to find out if they have a solid therapeutic window. This type of research is directly related to the patent system, as changing one functional group can get you around most patents, eventually. So you like to bulk up your catalogue and patent all closely related compounds, while choosing only the best among them, or, if you’re second to market, one that hasn’t yet been patented.
This work is incredibly data intensive, and requires many Ph.D’s, assistants, and high powered computers and testing equipment to achieve. But it is hardly necessary in the absence of a patent regime. In the absence of patents, (and of course the FDA), you could just focus on finding a sufficient therapeutic window, and cut out the remaining tests.
Patents also grossly distort the market, leading drug companies to focus most of their research on “me too” drugs that tweak an existing formula just enough to enable it to be repatented, and use it to replace the older version that’s about to go generic. Then the drug reps hit the hospitals and clinics, drop off some free samples and pamphlets, and (most M.D.s relying on drug industry handouts for their information on drugs that come out after they leave med school) the “me, too” drug becomes the new standard form of treatment.
The license cartels and drug patents are two examples of essentially the same phenomenon: First, the government creates a honey pot by enforcing a monopoly and making particular forms of service artificially lucrative. Then the market skews toward where the money is, as practitioners adopt the more lucrative business model and crowd out affordable alternatives.
Okay, so let’s clear the air here a bit. In the first place, whatever may be the truth about the claim that “[p]atents are often justified by the allegedly high cost of developing drugs,” the better question is whether we will have more and better drug research and development with patents or without them regardless of whether those patents go to “big pharma” or to “small start-up firms.” That is, we shouldn’t really care who the incentive of profitable patent rights is spurring on to do research, and that is true whether such research is on cancer drugs or toe fungus drugs.
If Mr. Carson or his commenter believe that there are better ways to encourage such research, they should by all means argue for them. I, however, know of no better incentive than self interest and until I am shown fairly compelling evidence to the contrary, I am not inclined to believe that removing the profit motive from drug research is likely to produce a better, more readily available or affordable pharmacopeia.
Now, that said, no one bothering to read this far should leave thinking I’m an apologist for the pharmaceutical companies. Their successful efforts some years back to retroactively extend the life of patent protection (and similar so-called “reforms” in copyright for the entertainment industry) constitutes nothing more than massive theft and the politicians who voted for such theft should all be horsewhipped. They all created and / or invented whatever they did when the state of the law provided a certain term of proprietary rights and they should enjoy the benefit of that bargain, but nothing more. If the case could be made for patents or copyrights of longer duration, whether for drugs or novels or whatever, fine. But such revised laws should take effect only prospectively. Retroactive extension deprives the public (you and me) of our rightful future expectations with regard to these properties, future expectations we have been paying for throughout the life of the original patents or copyrights. Moreover (okay, go ahead and get back on your Kantian high-horse for a moment here), fair’s fair and a bargain is a bargain.
I don’t deny that the current state of patent law should be extensively reformed (starting with repealing the patent extensions granted “big pharma” in the recent past). It is also true that, to use Mr. Carson’s phrase, patents “distort the market … [skewing it] toward where the money is.” But, ignoring the emotive connotations of “distort,” it is true of all property schemes that they provide incentives toward certain sorts of behavior and against others.
Perhaps the current system does encourage gaming of sorts which we want to discourage, instead. Perhaps we permit new patents on new drugs that are too closely similar to previously developed drugs. I say perhaps. In fact, I don’t know whether it does or not. The point, however, is that there are all sorts of ways of changing the existing system short of simply abolishing it.
And replacing it with what? The milk of human kindness as a spur to research or, what I fear is the real intended replacement, more massive government control and funding?
Do you want more invention and innovation or less? Do you want more creative works of art or fewer? Those, I think, are the critical questions in any useful discussion of intellectual property. And at the risk of repeating myself, details aside, I know of no better means of getting more of both than by encouraging self-interest through the creation of private property interests in the fruits of such invention and creativity.
Do you?
Filed in The Boardroom, The Bureau
I’m more or less in agreement. I’ve never really understood the clear distinction some libertarians make that real property is legit but intellectual property isn’t.
Why not cut out the middleman of property interest, and encourage self-interest with cold, hard cash?
Personally, I feel that a system of grants and prizes that reward drug companies for creating cures and treatments where there is the most need, rather than the most patent-related-profit, is the way to go (at least when it comes to medicine).
Such a solution is inherently unlibertarian (since a government organization would need to be created to administer and fund the prize system), but to me, that’s a small price to pay.
Mr. Scott:
Thanks for the comments. If the price were low enough and the result positive enough, I’d have no merely doctrinal objections. But I strongly doubt that would be the case. You’d have lobbyist’s capturing the regulators or whoever the government decision makers were and thus “distorting the market.”
And even if you didn’t (but, trust me, you would), who’s to say where there is the most need? If I’d rather have a hair restorer than, say, prostate cancer medicine, who’s to say my values are wrong? Give inventors the right to sell their inventions and you then permit the market to decide how valuable they really are. Let some panel of scientific experts insinuate their subjective values under the guise of collective objectivity and all you have is a command economy for drugs, precisely what I want to avoid.
Another problem that anti-patent libertarians ignore is that merely abolishing patents and copyrights won’t create a freer market so much as invite other, more destructive forms of intervention. In antitrust, we’re seeing a concerted effort by FTC, DOJ and private attorneys to substitute antitrust for IP, which in practice means having a small group of government lawyers decide what innovation is legal and what innovation is “anti-competitive.” It also means an innovation deemed worthy by regulators is immediately placed in the public domain — since under antitrust, consumers have the right to the work of producers.
To me, part of the problem is that what is patentable seems to be a low hurdle. In the example above, if the knock-offs were all protected by the initial patent, then the extra work by the army of PHDs would be unnecessary.
I have encountered problems in engineering where things that were patented clearly did not deserve protection. They were “obvious to a skilled practitioner.” However, they had made it by the patent office (rarely examined by skilled practitioner in either the field or English) , and so it is frequently not worth the effort to undertake a development that provides value to customers. A certain unstable patent lawyer once asked me what the big deal was, just fight the case. This rarely happens in practice, the odds of any new development being money making is typically about 1 in 10, add in a crap shoot dealing with patent lawyers and it becomes 1 in 20. On top of that, the cost of development goes way up (lawyers are not cheap, neither is the opportunity cost of an engineer thinking about how to fight the patent). This may not be a major barrier for big companies where the payoff is large, but it keeps good stuff from being developed by small companies.
Another analogy is the fate of the Verve’s Bittersweet Symphony. The Rolling Stones get all of the profit from what is clearly an innovative piece of music. IP law is being used to stifle innovation. Could you imagine Thelonius Monk suing Miles Davis for stealing a riff from a solo?
I think IP law does provide some value in that it encourages openness, but it has gone so far overboard that it now suppresses innovation. I guess I am supporting your suggestion for reform, but it is not clear to me how we could get there. Perhaps eliminating it would be the cleanest solution.
“I’m more or less in agreement. I’ve never really understood the clear distinction some libertarians make that real property is legit but intellectual property isn’t.”
Well, there is at least one stark difference between tangible property and intellecutal property and that is transferability. All theories and divisions of property arise due to the fundamental scarcity of the world we live in. If I am living on a piece of land then that precludes you from living on it. If I sell that land (or give it to you, or raffle it off) then I have transferred a tangible good to you and am now not able to use it myself.
Intellectual property doesn’t work as such, because it’s not scarce. If you write a poem and then recite it to me (or sell me piece of paper with a copy on it) and I memorize it, then I have a perfect copy of that “property” in my mind. I can then recite it as often as I like to whomever I like, and it it no way prevents you from using and enjoying the same poem. You have lost absolutely nothing in the deal. Yes, if I make a million copies of your poem and distribute them for free, I have hampered your ability to make a financial profit from the work, but you still have same poem you started with.
Further, since I have a “copy” in my own head, intellectual property laws prevent me from divulging the contents of my own mind in the manner I see fit. If it truly were property, you should be able to charge me every time I recite it to a friend, which is obviously ridiculous.
All of this argues that IP is not property at all, but in fact a limited grant of monopoly privilege from the government. So the question becomes does a libertarian object to this monopoly on purely principled grounds, or is IP so useful in promoting innovation that libertarians can accept (or at least overlook) the fact that it is a creature of the state?
Stretch, thanks for the comments. Needless to say, I disagree. And the reason I disagree is because scarcity alone is not economically important. Nothing could be more rare than essays of my without any spelling, grammatical or typographical errors, but that doesn’t mean I can auction them off for a fortune on eBay.
To be sure, once created the cost of reproducing a copy (the marginal cost of production, if you will) almost immediately approaches zero and, to be sure, that does indeed distinguish most intellectual property from most tangible property. At least until we start settling other planets and someone invents one of those science fiction machines that transforms matter into whatever we want.
But what about the original creation? Will we have people working tirelessly on pharmaceutical formulas to cure cancer knowing that the moment they crack the code everyone else can start reproducing it for free, effectively confiscating “for the people” the fruits of their intellectual labor?
Viewed that way, it’s not quite the same thing as a poem, is it?
And okay, so we’ll always have people writing bad poetry whether it is copyrighted or not. For the most part, copyright of bad poetry at least could be said to do no harm. The world does not suffer by my refusing to share my high school written poetry with it.
But the world does suffer if real works of good art go uncreated because self-interested artists decide there’s just no point in doing art, better to go get that MBA. And it definitely suffers if would-be research scientists and engineers are similarly dissuaded because the potential economic incentives of research are not great enough.
“Another analogy is the fate of the Verve’s Bittersweet Symphony. The Rolling Stones get all of the profit from what is clearly an innovative piece of music. IP law is being used to stifle innovation. Could you imagine Thelonius Monk suing Miles Davis for stealing a riff from a solo?”
Nope. What I could easily imagine — given that they played together occasionally, what probably did happen more than once — would be Monk accusing Miles of screwing up the timing.
As for the “derivative use” differences between copyrighted creative expressions, on the one hand, and variations on patentable inventions and processes, on the other, I recognized that there is all sorts of room for disagreeing about, as you say, how high the hurdle should be set.
Stretch,
Your argument basically boils down to IP = public good. It’s non-rivalrous (my use of it does not impede yours) and difficult to exclude others from consuming (I can’t keep you from memorizing the poem, and it would be tough to charge you for every recitation). But light-houses, broadcast television and fireworks displays are also public goods. Why can I legitimately own a light-house but not a poem?
By the same token, though, the IP = public good argument may give some credence to abolition of patent, copyright and trademark (PCT). After all, people have created some public goods for centuries without government enforcement.
“Needless to say, I disagree. And the reason I disagree is because scarcity alone is not economically important.”
No, but the scarcity of a useful resource is economically important. Sadly, any perfect essays you have lying around probably don’t fall under this category, although if you become suitably famous you might be able to make some cash from them on eBay.
My point was only to highlight a major difference between tangible property and IP. You say that all property is a product, “of a state enforced legal system one of the principle justifications for is the sorting out of competing claims over the same resources.” But no one has to compete over the use of an idea. Everyone in the world can listen to the same song at the same time without harming anyone else’s use and enjoyment of that song. I was really only responding to AMW’s question about how people can make the distinction.
I should also point out that even though they’re grouped together under the IP umbrella, I do think there are important differences between copyright and patents. From a pragmatic perspective, I absolutely believe there is weight to the idea that without some form of patent grants, innovation and progress would suffer. I don’t think the same can be said for copyright. People have produced art pretty much since there were people at all. And with modern technology drastically increasing access to the means of production and distribution of art, there will be no shortage with or without copyright.
“But the world does suffer if real works of good art go uncreated because self-interested artists decide there’s just no point in doing art, better to go get that MBA.”
Seriously? First, this ignores just how difficult it is to make any money at all, let alone good money producing any form of art. As practical advice, it would probably be better if everyone producing good works of art gave up and got their MBA. Second, I would argue that the copyright system leads to the mass production of mediocre, lowest-common-denominator art and the complete overshadowing of the good stuff. Honestly, a large portion (maybe most?) of the great artworks in human history have been created by people who also had to hold down some form of day job or with other means to feed themselves.
“And it definitely suffers if would-be research scientists and engineers are similarly dissuaded because the potential economic incentives of research are not great enough.”
As above, I think this is patent territory and that it plays a valuable role, though the system is in need of a massive reform.
“Your argument basically boils down to IP = public good. ”
No, that’s not it at all. My argument is that IP isn’t scarce and transferable and is therefore distinct from tangible property. Public goods by definition involve scarcity. There is some scarce resource that needs to (or perhaps should be) used by the public at large. If we are using a portion of land as a public park, that land cannot be used for something else. If we sell the park to a private developer, the public no longer owns it and cannot insist on having a picnic there.
Of course, public goods can be provided by private interests. Your notion of a lighthouse, for instance, is the classic example. But the point remains, that the lighthouse can only be used by one person (or group of people) at a time. If I am using the lighthouse to warn ships of the rocks, then you cannot also use it to send up the bat signal. Therefore, we need some system of property rights to determine who gets to use the lighthouse.
To put it simply, property arises because there is competition for scarce resources. An idea, a piece of IP, is not scarce as it can be used by everyone in the world, perhaps for wildly different purposes, at the same time. Therefore, ideas are not property.
Again, I’m just explaining the crux of the distinction between tangible property and what we call intellectual property.
Personally, I do not think we should treat IP as property and I think that doing so leads to a lot of the problems we see in our current system. That said, I’m not totally averse to granting certain privileges to creators of art, inventions etc. I just believe that if we define them (accurately, imo) as state privileges and not as property we can create a much better system, one that would not only be less influenced and controlled by the state, but one that would also produce better outcomes.
Thanks for the comments. If the price were low enough and the result positive enough, I’d have no merely doctrinal objections. But I strongly doubt that would be the case. You’d have lobbyist’s capturing the regulators or whoever the government decision makers were and thus “distorting the market.”
And even if you didn’t (but, trust me, you would), who’s to say where there is the most need? If I’d rather have a hair restorer than, say, prostate cancer medicine, who’s to say my values are wrong? Give inventors the right to sell their inventions and you then permit the market to decide how valuable they really are. Let some panel of scientific experts insinuate their subjective values under the guise of collective objectivity and all you have is a command economy for drugs, precisely what I want to avoid.
Of course it’s distorting the market–that’s the point. I’m not suggesting that it’s a perfect system. But having a market distorted by the subjective values of scientific experts seems superior ot having it distorted by the intricacies of patent law. And as long as patent law defines what is profitable, it will be the controlling factor (even if the specific rules change, they’ll still exist).
The real problem is that medicine is one of those areas where capitalism breaks down. One of you fine gentlemen here at Positive Liberty (unfortunately, I don’t remember which one) made a very important point in a post on christmas gifts: Capitalism doesn’t work very well when the person doing the buying isn’t the same as the person actually using the good. And that’s the case in our present medical system, where the doctor is choosing the drug, the HMO is paying for the drug, and the patient is the one actually using the drug–the forces that would normally cause the manufacturer to improve the quality or decrease the cost of his goods are simply too diffuse to have their proper effect.
If we radically altered the way this country’s healthcare system worked, then my grant-and-prize method becomes less usefull. But I don’t really see that happening. And besides, I’d rather abolish drug patents than, say, perscriptions.
Sadly, any perfect essays you have lying around probably don’t fall under this category, although if you become suitably famous you might be able to make some cash from them on eBay.
My nearly universal fame is a very closely guarded secret. Thanks again for the comments, Stretch. I appreciate your perspective. As for scarcity, the number of copies of, say, Shakespeare’s plays may be potentially infinite but the number of plays, themselves, are finite and every one of them is unique. It is that act of creation (and on the patent side, invention) that I want to encourage.
Mr Scott:
I certainly agree that for my approach to work properly other reforms in the health care industry would also be required.
BTW, It probably wasn’t me who quoted the time honored maxim about gift giving and such, but the general principle remains that I spend my own money on me the most efficiently, someone else’s money on me less efficiently and someone else’s money on yet another person the least efficiently. I would have people buy their own medicine even as they buy their own food, as far as that goes, albeit with whatever expert advice they deemed prudent. Ah, but that’s another thread, isn’t it?
I would have people buy their own medicine even as they buy their own food, as far as that goes, albeit with whatever expert advice they deemed prudent.
Sadly you may get your wish, we may soon need a doctor’s permission to buy certain foods. “Philly cheesesteak? Sorry, you already had one this year….I don’t care if you ran 10 miles today, without a note from your doctor, those are the rules.”
Public goods by definition involve scarcity.
In point of fact, they do not. Public Goods involve non-rivalrous, non-excludable consumption. The light produced by the lighthouse is not scarce. Anyone within viewing range can use it.
Of course saying that the light is “not scarce” is at least something of an overstatement. I’ll admit that the viewing range of the light is a finite space, and therefore if you kept throwing ships into that range you would eventually fill it up and some ships would be blocking the light from others. Economists aren’t sure that there is such a thing as a pure public good. But within a reasonable limit we can say that the light isn’t scarce.
What I’m arguing is that IP may in fact be an example of a pure public good.
It’s not only “pseudo-Kantian” libertarians who oppose IP. At least some libertarians who uphold an Aristotelian theory of virtue ethics and natural rights also oppose IP. Check out Roderick Long’s “The Libertarian Case Against Intellectual Property Rights,” for instance. The deontology vs. consequentalism alternative is a false one.
Thanks for the comments, Mr. Plauche. I’ve already weighed in on natural rights. Whatever rights may be and wherever they may derive from, I don’t think it’s nature except in the fairly trivial sense that human beings are a part of nature.
As for the rest, I don’t believe in the tidy-looking dichotomy of deontological versus consequentialist ethics, myself. But neither, for what it’s worth, do I find virtue ethics to be a bona fide third approach. Rather, it tends to be either deontological (be what you are supposed to be) or consequentialist (if you want to be all that you can be, do this and don’t do that) or some combination of the two, albeit focusing on the individual rather than the individual’s relationship to others. That’s another discussion, though, isn’t it?
I haven’t read it, but you probably weighed in on deontic conceptions of natural rights, not virtue ethical conceptions.
As for virtue ethics collapsing into either deontology or consequentialism, well I think those who do so fail to grasp its important differences from each. As for it being some sort of amalgam, it’s not a haphazard mishmash. To simply pick out which aspects remind you of deontology and which aspects remind you of consequentialism is rather to miss the point. It is also to fall into the trap, in practice, of acting as if there really are only two types of ethical theories. Also, you say that virtue ethics focuses on the individual rather than on his relationship to others. This is true in the sense that virtue ethics is a supply-side type of ethical theory while modern consequentialist and deontological theories tend to be demand-side, meaning that for the former it is primarily (but not exclusively) facts about the moral agent that are important whereas for the latter it is primarily (but not exclusively) facts about the moral recipient that are important. However, other-regard (in the form of friendship and virtues like benevolence, generosity, etc.) play an important role in virtue ethics. It is also important to distinguish between Aristotelian virtue ethics and that watered-down, confused analytic variety popular among some moral theorists today.
But you’re right, this is not the place to get into an in-depth discussion over these issues. Suffice to say, there are non-deontological and non-consequentialist opponents of IP.
[...] a post on “Positive Liberty” from back in August, I came across this comment from D. A. [...]